Bulgaria’s Strict Advertising Ban Drive Out Gambling Operators

The Bulgarian gambling industry is facing turbulent times as new advertising restrictions implemented in May 2023 have drastically impacted operator revenues. With advertising options cut back to nearly zero, several gambling firms in Bulgaria are questioning the viability of remaining in the market. As some operators weigh their options, this regulatory shift could reshape Bulgaria’s position as a gambling hub in Eastern Europe.

Bulgaria’s Advertising Ban: Will It Force Gambling Operators Out?

The once-attractive Bulgarian gambling market has been thrown into uncertainty since May 18, when the government introduced a near-complete ban on gambling advertisements. This included barring ads on TV, radio, newspapers, and online media. Only billboards, restricted to locations away from schools, playgrounds, and protected areas, were allowed, along with strict limits on in-building advertising. Operators say these changes have impacted revenues significantly, and some are already considering leaving the Bulgarian market.

Key Points:

• Bulgaria’s advertising restrictions are causing a revenue drop, with operators like Sesame, 8888, Winbet, and Bwin reporting double-digit declines in website traffic.
• Self-exclusion rules have been tightened, and gambling venues in towns under 10,000 people are required to close within three years.
• The rise in illegal market share to 91% highlights the effectiveness of these changes but may lead to increased unregulated gambling activity.

Mark Chakravarti, investments director at Sportingwin, observed that the advertising ban led to a revenue dip of around 20%, similar to what global studies indicate when gambling restrictions limit TV visibility. Entain’s Bwin, a licensed player in the market since 2016, saw a 17% drop in web traffic, highlighting the far-reaching effect of the restrictions. Major operators like Betway and Betfair have already exited Bulgaria, and industry insiders believe others may soon follow.

Local Brands Struggle to Compete as Revenues Dip

The advertising ban has hit both local and international brands hard, though some operators with deeper regional expertise have managed to mitigate losses better. Sportingwin, for example, reported only single-digit losses due to its local market understanding, while global brands like Bwin struggle with the double-digit drop in traffic. Angel Iribozov, chair of the Bulgarian Gaming Association, described these changes as a “perfect storm” and “disastrous” for Bulgaria’s regulated gambling market.

While a small concession has been granted—exempting social media platforms that don’t exercise editorial control—most operators believe this won’t offset the revenue loss, as only a fraction of high-value players come from social media. Operators have been forced to adjust to a restrictive framework, and companies like Sportingwin are already exploring other markets, including the UK, Romania, and Brazil.

Increasing Costs and Hurdles for New Entrants

Historically, Bulgaria’s regulated market attracted operators due to low corporate taxes and relatively accessible licensing fees. However, the landscape has shifted dramatically. Since last year, licensing fees for new sports betting entrants have quadrupled from BGN100,000 (€51,000) to BGN400,000 (€204,000). Additionally, the required paid-in capital has increased from BGN500,000 (€255,000) to BGN750,000 (€383,000), adding financial pressure to new entrants.

As regulatory costs soar, established operators also grapple with rising compliance requirements and an opaque regulatory process. There has been limited dialogue between regulators and the gambling sector, making it difficult for operators to plan for long-term success. In May, all political parties supported the advertising restrictions, signaling an unprecedented unity in government to curb gambling’s influence on Bulgarian society.

Regulatory Shifts Open Doors to Illegal Gambling

According to Yield Sec, a firm tracking regulated gambling markets, Bulgaria’s grey market share was estimated at 87% in 2023. By mid-2024, this had risen to 91%, with illegal operators capitalizing on the restrictions facing licensed businesses. Even with measures like blocking payments to unlicensed companies, illegal gambling continues to flourish, capturing a disproportionate share of gross gaming revenue (GGR).

Chakravarti and other industry experts worry that limiting legal advertising will only encourage players to seek unregulated sites, where player protection is minimal, and responsible gaming measures are absent. A player visiting black-market sites may face few barriers, increasing the risk of money laundering and unprotected gambling.

What Lies Ahead for Bulgaria’s Gambling Market?

For many operators, Bulgaria’s once-stable regulatory environment has become fraught with uncertainty, leading them to consider their options. As some local brands adapt to these changes, international companies may find Bulgaria increasingly unviable. The Bulgarian Gaming Association is concerned that the combined pressures of the advertising ban, increased costs, and lack of government dialogue could prompt a mass exodus of operators.

According to Chakravarti, diversification is becoming essential. “As a small local brand operator, we have a better understanding of the local market,” he noted. But for those unable to navigate the evolving rules, exiting Bulgaria and investing in friendlier jurisdictions may be the only option.

With restrictive advertising regulations and rising operational costs, Bulgaria’s gambling market is at a crossroads. The recent exodus of major brands, including Betway and Betfair, suggests that Bulgaria’s top-down approach could drive other operators out of the market. As gambling regulations tighten, the future of Bulgaria’s regulated market remains uncertain, leaving operators to choose between adapting to the new rules or seeking opportunities elsewhere.